Business Segment Information

The Company is organized functionally in geographic operating segments. Accordingly, management focuses its attention on revenues, net revenues¹, operating income, identifiable assets, capital expenditures, depreciation and amortization and equity generated in each of these geographical areas when evaluating the effectiveness of geographic management. Transactions among the Company’s various offices are conducted using the same arms-length pricing methodologies the Company uses when its offices transact business with independent agents. Certain costs are allocated among the segments based on the relative value of the underlying services, which can include allocation based on actual costs incurred or estimated cost plus a profit margin.

Financial information regarding the Company’s operations by geographic area is as follows:



(in thousands)	UNITED STATES		OTHER NORTH AMERICA	LATIN AMERICA	NORTH ASIA	SOUTH ASIA	EUROPE	MIDDLE EAST, AFRICA AND INDIA	ELIMI- NATIONS		CONSOLI- DATED
Three months ended June 30, 2018:
Revenues from unaffiliated customers	$	567,271	80,268	38,697	674,101	172,696	315,950	108,576	—		1,957,559
Transfers between geographic areas	30,805		3,976	3,921	6,126	6,832	14,825	5,429	(71,914	)	—
Total revenues	$	598,076	84,244	42,618	680,227	179,528	330,775	114,005	(71,914	)	1,957,559
Net revenues¹	$	271,880	34,749	15,923	140,583	44,886	102,371	33,125	(971	)	642,546
Operating income	$	63,628	10,077	2,701	70,359	13,374	16,958	6,490	(3	)	183,584
Identifiable assets at period end	$	1,488,060	153,827	54,186	540,954	157,479	526,607	217,716	(5,997	)	3,132,832
Capital expenditures	$	6,032	2,191	167	559	695	1,225	1,244	—		12,113
Depreciation and amortization	$	8,447	473	395	1,303	542	1,955	461	—		13,576
Equity	$	1,196,226	56,702	26,625	250,513	112,259	157,493	127,032	(34,291	)	1,892,559
Three months ended June 30, 2017:
Revenues from unaffiliated customers	$	452,217	62,554	23,463	620,050	157,698	259,533	96,764	—		1,672,279
Transfers between geographic areas	28,155		2,825	3,759	4,835	5,408	9,664	5,034	(59,680	)	—
Total revenues	$	480,372	65,379	27,222	624,885	163,106	269,197	101,798	(59,680	)	1,672,279
Net revenues¹	$	250,027	28,173	14,008	120,959	38,228	80,896	30,286	1,056		563,633
Operating income	$	64,265	12,317	2,246	58,093	12,513	13,419	5,390	(3	)	168,240
Identifiable assets at period end	$	1,487,582	129,830	48,064	576,655	129,002	437,628	207,191	6,804		3,022,756
Capital expenditures	$	6,852	569	957	663	409	10,501	429	—		20,380
Depreciation and amortization	$	7,731	386	300	1,362	556	1,227	480	—		12,042
Equity	$	1,147,962	61,957	24,320	402,211	117,077	135,726	124,628	(35,244	)	1,978,637




(in thousands)	UNITED STATES		OTHER NORTH AMERICA	LATIN AMERICA	NORTH ASIA	SOUTH ASIA	EUROPE	MIDDLE EAST, AFRICA AND INDIA	ELIMI- NATIONS		CONSOLI- DATED
Six months ended June 30, 2018:
Revenues from unaffiliated customers	$	1,102,140	156,793	71,419	1,304,673	341,296	621,742	213,758	—		3,811,821
Transfers between geographic areas	59,686		7,538	7,308	12,143	13,382	29,013	10,784	(139,854	)	—
Total revenues	$	1,161,826	164,331	78,727	1,316,816	354,678	650,755	224,542	(139,854	)	3,811,821
Net revenues¹	$	549,065	65,196	30,668	277,791	89,292	201,006	66,326	(960	)	1,278,384
Operating income	$	133,276	19,095	5,071	140,282	28,506	36,236	13,928	8		376,402
Identifiable assets at period end	$	1,488,060	153,827	54,186	540,954	157,479	526,607	217,716	(5,997	)	3,132,832
Capital expenditures	$	9,203	3,719	672	1,343	1,024	8,416	1,532	—		25,909
Depreciation and amortization	$	17,212	871	763	2,679	1,125	3,931	917	—		27,498
Equity	$	1,196,226	56,702	26,625	250,513	112,259	157,493	127,032	(34,291	)	1,892,559
Six months ended June 30, 2017:
Revenues from unaffiliated customers	$	878,236	122,453	45,566	1,186,478	304,938	490,990	188,750	—		3,217,411
Transfers between geographic areas	52,468		5,464	7,394	9,886	10,839	18,986	9,998	(115,035	)	—
Total revenues	$	930,704	127,917	52,960	1,196,364	315,777	509,976	198,748	(115,035	)	3,217,411
Net revenues¹	$	480,812	53,966	28,924	232,792	76,223	156,854	60,017	1,650		1,091,238
Operating income	$	116,611	17,368	5,697	111,445	25,737	25,065	12,433	(2	)	314,354
Identifiable assets at period end	$	1,487,582	129,830	48,064	576,655	129,002	437,628	207,191	6,804		3,022,756
Capital expenditures	$	12,094	803	1,212	1,903	782	15,579	768	—		33,141
Depreciation and amortization	$	15,484	758	620	2,682	1,087	2,398	940	—		23,969
Equity	$	1,147,962	61,957	24,320	402,211	117,077	135,726	124,628	(35,244	)	1,978,637

_______________________

¹Net revenues are a non-GAAP measure calculated as revenues less directly related operating expenses attributable to the Company's principal services. The Company's management believes that net revenues are a better measure than total revenues when evaluating the Company's operating segment performance since total revenues earned as a freight consolidator include the carriers' charges for carrying the shipment, whereas revenues earned in other capacities include primarily the commissions and fees earned by the Company. Net revenue is one of the Company's primary operational and financial measures and demonstrates the Company's ability to concentrate and leverage purchasing power through effective consolidation of shipments from customers utilizing a variety of transportation carriers and optimal routings.

The following table presents the calculation of consolidated net revenues:



	Three months ended				Six months ended
	June 30,				June 30,
	2018		2017		2018		2017
Total revenues	$	1,957,559	$	1,672,279	$	3,811,821	$	3,217,411
Expenses:
Airfreight services	593,325		499,418		1,106,829		942,822
Ocean freight and ocean services	385,156		385,927		764,574		751,990
Customs brokerage and other services	336,532		223,301		662,034		431,361
Net revenues	$	642,546	$	563,633	$	1,278,384	$	1,091,238